Cinema chain hungry for more box office success

PETER RANSCOMBE

CINEMA operator Cineworld hopes that the release of the next films in the Hobbit and Hunger Games franchises will help it to top last year’s rush to see James Bond’s Skyfall.

The Aim-quoted firm is pinning its hopes for the run-up to Christmas on The Hobbit: The Desolation of Smaug and The Hunger Games: Catching Fire as it comes up against tough year-on-year comparisons with the most-successful Bond outing.

Analysts expect popular titles including Despicable Me 2, Monsters University and The Wolverine will have helped the chain to fight back against the summer heatwave, while last year’s Olympic Games will lead to flattering year-on-year comparisons during the third quarter.

Chief executive Stephen Wiener said: “There is a strong film line up for the second half.

“In the third quarter there are weaker comparatives due to the impact of the London Olympics on scheduling last year. By contrast, there is a tougher fourth-quarter comparative due to the phenomenal success of Skyfall.”

His comments came as the company posted a 24 per cent jump in pre-tax profits for the six months to 27 June to £16.5 million, on the back of a 22 per cent rise in revenues to £201.6m. The interim dividend was increased by 7.9 per cent to 4.1p.

Box office takings rose by 8.9 per cent, beating the wider industry’s 7.6 per cent increase, boosted by a combination of higher prices and more customers flocking to the flicks.

Hit films in the opening six months of the year included Iron Man 3, Les Miserables and Star Trek: Into Darkness.

Cineworld also hailed the popularity of 3D movies, which accounted for 30.5 per cent of box offices takings, compared with 18.5 per cent in the opening half of 2012.

Retail revenues – which include sales of ice cream, pick-and-mix and popcorn – rose by 9.7 per cent, boosted by the opening of Starbucks coffee shops inside two of its sites.

Cineworld’s market share rose to 25.2 per cent from 24.7 per cent and, with the takeover of the Picturehouse chain, for which the group is seeking Competition Commission clearance, it hit 27.2 per cent.

Wiener said the firm is on track to open 20 cinema complexes by the end of 2017, while its number of Unlimited card subscribers has risen to 350,000 from 320,000 and registrations for its Mycineworld online booking service have now topped three million.

Douglas Jack, an analyst at Numis Securities, said: “In what we expect to be a flat year for market attendance, Cineworld is materially outperforming due to self-help initiatives.”

Investec Securities analyst Steve Liechti said: “Cineworld is delivering strong organic returns from higher admissions, an increase in revenue per head, unit roll-out and a rise in UK market share. We view the outlook as positive.”

Wayne Brown, an analyst at Canaccord Genuity, added: “Whilst the sunny weather is not particularly helpful, there are weaker comparatives from the Olympics. The second-half film slate is strong with 3D titles.”